Jurisdiction(s):
United Kingdom

Key definition

Auction definition

What does Auction mean? An auction is a method of sale in which goods, property or rights are offered to competing bidders and the item is sold when the auctioneer closes bidding (traditionally on the fall of the hammer) to the highest acceptable bid. In practice it is widely used for real estate and chattels, including sales by mortgagees, LPA receivers, liquidators and enforcement officers, and for certain public‑sector disposals and procurement (including electronic and reverse auctions). Key legal features typically include published conditions of sale, reserve prices, bidder registration/deposits, and completion deadlines. Sales by auction are addressed by the Sale of Goods Acts in...

Private equity MBO auction process: stages, due diligence, bid terms, sale documentation, exclusivity, financing, exchange and completion

Published by a LexisNexis Corporate expert

Practice notes

Auction disposals frequently feature in sizeable Private equity deals. Sometimes labelled ‘institutional buyouts’, owner-led auctions are set up to trigger competition among several prospective purchasers. This Practice Note concentrates on the mechanics of the auction in a management buyout setting; for broader guidance on auction disposals generally, see Practice Notes: Auction sales—share purchase and Auction sales—asset purchase, and also: Auction sale (private M&A) transactions—checklist. It outlines the principal features of the process in a management buyout context.

The process

The seller directs and manages the timetable, supported by a financial adviser (e.g. an investment bank). In transactions of this scale, incumbent managers typically hold only a modest Equity interest in the target and so wield limited sway over the sale arrangements and within the sale process overall. See Precedent: Auction sale process letter—private M&A. Alongside private equity houses, trade acquirers may equally target the business. The seller (often a private equity fund seeking an exit) collaborates with the financial adviser to map the full universe of potential bidders. The same core principles usually apply regardless of buyer type or structure. In a private equity exit, the auction flow broadly mirrors any other auction and ordinarily proceeds through the following stages:...

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Web page updated on 21/05/2026

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